by Bob Trowbridge

Created on: August 25, 2010

Retailers are dropping like the proverbial flies. The stock market is on a slippery down-slope right now. This is one of the more dangerous times to invest in retail-related stocks.

This does not mean that no one should invest in retail-related stocks. It means that one should use much more caution than is normally required for any investment. In fact, more caution should be used in investing in any stocks now. When the market is going down it tends to pull good stocks down with the bad.

The good news is that the savvy investor can find some retail-related stocks at bargain prices in this environment if you know what to look for.

The Retail Environment

Right now we are dealing with unemployment, house foreclosures, and continued indebtedness. The American middle class is in big trouble. As a result, Americans are saving more and spending less. They are trying to get out from under their indebtedness.

This means less money to spend on stuff, the stuff that retailers sell. It is not a good environment for most retail outlets. A wrong bet could be disastrous for your portfolio. When dealing with the environment we are in right now, the old rules may not apply and we need to look at the retail situation with different eyes.

What’s Old

Electronics are an old standby. People buy televisions and audio-visual stuff. People buy electronic gadgets of every type, including game players, music players, and hand-held devices of every kind. People line up for the latest Apple phone, MP3 player, or portable computer (or electronic reader).

As investors we need to look at least a couple of years down the line unless we plan to flip our investments quickly. Can electronics continue in their bull market? Do Americans have the money to continue to upgrade their computers and other electronic stuff? Can they afford larger and larger TVs or newer 3D TVs? They may want all of that stuff but some may have to choose between what they want and what they need to survive. Priorities can change quickly in this environment.

All large retail outlets, big department stores and other big chains, are vulnerable to the downturn. It is dangerous to believe the government’s assurances that the worst is over. If you only get your information from the mainstream media, you are in trouble. Things are not getting better and they could get a lot worse.

If you are thinking of large chains, whether retail outlets or restaurant chains, take a real close look at where they are today and project

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